TN_21 - "Compass Records" (Case 21) Please note:...

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"Compass Records" (Case 21) Please note: Copyright © 2005 by the Trustees of the University of Virginia Darden School Foundation. 1) This is a working model. Assumptions / Inputs presented can be changed to vary the results. 2) As long as default spreadsheet calculation is "automatic" the impact of changing assumptions will be computed in real time. If calculation is set as "manual" you should press the F9 function key to recalculate results. To set numerical calculation settings to automatic look under tools, options, calculations menu.
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Exhibit TN1 COMPASS RECORDS Discounted Cash Flow Analysis for "License" and "Produce and Own" Alternatives Using Base-Case Unit Assumptions ASSUMPTIONS Sales projections Units Pricing Marketing and promotion U.S. sales 5,000 U.S. wholesale unit price $11.45 Print advertising $3,000 U.K., Ireland, Europe sales 2,000 Less distribution fee $9.05 Posters and photos 500 Japan, New Zealand, Australia sales 1,000 EUR 7.00 E-card mailings 1,000 Canada sales 500 Euro/US$ exchange rate 1.224 Independent radio promoter 2,500 Units sold by artist 1,500 $8.57 Retail placement 5,000 Total–projected sales (units) 10,000 Japan, NZ, Australia price (US$) $6.50 $12,000 Canada price (US$) $7.00 Weighted average cost of capital 12% Unit price for artist-sold units $6.00 CD mail-out units 2,000 Distribution fee 21% Cost per mail-out unit per unit $0.50 Postage and collateral per unit $2.00 Total cost for CD mail-out $5,000 CASH FLOWS Own License Years Years 0 1 2 3 0 1 2 3 Annual percentage sold 0% 75% 20% 5% 0% 75% 20% 5% U.S. forecasted units sold 0 3,750 1,000 250 0 3,750 1,000 250 U.K., Ireland, Europe forecasted units sold 0 1,500 400 100 0 1,500 400 100 Japan, New Zealand, Australia forecasted units s
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This note was uploaded on 11/22/2011 for the course FIN 505 taught by Professor Chingshing during the Spring '11 term at Solano Community College.

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TN_21 - "Compass Records" (Case 21) Please note:...

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